We derive a theory of magnetic susceptibility (\ensuremath{\chi}) of Bloch electrons including the effects of periodic potential, spin-orbit interaction, and localized magnetic moments. We use a temperature-dependent Green's-function technique to evaluate the thermodynamic potential which is then used to obtain a general expression for \ensuremath{\chi}. Our formula for \ensuremath{\chi} is expressed as \ensuremath{\chi}=${\ensuremath{\chi}}_{\mathrm{MK}+\mathrm{P}{\ensuremath{\chi}}_{\mathrm{CW}}}$, where ${\ensuremath{\chi}}_{\mathrm{MK}}$ is the magnetic susceptibility of Bloch electrons obtained by Misra and Kleinman, which includes spin, orbital, and spin-orbit contributions, P is the shift in the electron paramagnetic resonance frequency, and ${\ensuremath{\chi}}_{\mathrm{CW}}$ is the Curie-Weiss susceptibility. The second term, which is obtained for the first time by us, is due to the interaction of conduction-electron magnetic moment and the localized magnetic moments. Many-body effects, although not included from first principles, are discussed on the final results of \ensuremath{\chi}, in view of their importance. We also discuss the importance of the theory in possible applications. Finally, we believe that the theory presented in this work is the most general and thorough treatment which has yet been made of this problem.
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